Prepayment Audits

The federal government spends billions of dollars each year transporting passengers and goods by air, sea, and land. In the 1940's, legislation was passed requiring all federal agencies to pay transportation bills upon presentation. Since that time, GSA has been auditing bills after payment. Funds recovered as a result of post payment audits are returned to the Treasury.

In 1985, Congress granted GSA the authority to audit bills prior to payment, and authorized GSA to delegate this authority to other agencies. By auditing prior to payment, agencies avoid excess transportation charges up front, using the resultant savings to procure additional transportation services. Effective October 2000 Public Law 105-264 [PDF, 129.8K] required that all federal agencies must conduct prepayment audits of all transportation billings.

The Financial and Business Solutions (FABS) Schedule 520 provides the tools needed to fulfill this requirement. Under this Schedule, Schedule 520 - Financial and Business Solutions identifies experienced GSA contractors capable of conducting prepayment audit services. Contractors must provide these services on a cost-per-bill basis, depending on the transportation mode. Audit management reports are available at an additional cost. Transportation bills transmitted by electronic commerce are audited at a reduced price from the cost for auditing transportation bills submitted by hard copy.

Participation in GSA's Multiple Award Schedule for prepayment audit services provides agencies with access to commercial firms that can ensure agencies are paying the lowest applicable rate for their transportation bills. Agencies can conduct prepayment audits on their own, but utilizing a contractor under this Schedule will make completion of the task quicker, easier, and more efficient.

Prepayment Audit Services Provided by the Contractor Include:

Bills and other documents are audited within five calendar days of receipt;

Bills are reviewed to determine if the lowest charges applicable to the movement were assessed; and

Bills are returned to the agency upon completion.

Upon identifying an over billing, the contractor prepares a statement of differences and provides copies to the billing TSP, the ordering agency, and GSA. By issuing a statement of differences, the contractor is obligated to evaluate any resulting TSP claim. The service is also available via Electronic Commerce, which provides the capability to receive and transmit invoices and shipment information via computer-to-computer transactions.

Additional Services

Agencies also have the option of acquiring additional services provided in the contract, as follows:

Duplicate Bill Determination - Contractor determines whether any bills received have been previously submitted by the TSP for payment;

Management Information and Reporting - Contractors have the capability to capture information electronically from billing documents being audited for report-generating options. The agency may request the capture of up to 32 data elements, and the creation of up to four reports per month, providing agencies with a valuable traffic management tool.

GSA has issued instructions and guidelines on the mandatory prepayment audit procedures. Any request for a waiver [PDF, 126K] to these requirements must be made in writing to the General Services Administration, Office of Governmentwide Policy (M), 1800 F Street, NW, Washington, DC 20405.